(Friday Market Open) Jobs growth seems to be leveling off a little after many months of feverish gains. Employment rose 164,000 in April, the U.S. government said in its Non-farm payrolls report Friday, below Wall Street analysts’ expectations for the second month in a row.

The new figure comes after a March jobs report that showed surprisingly tepid growth of just 103,000. That number got revised up to 135,000 on Friday. After revisions, job growth looks very strong at an average of 208,000 over the last three months, but that includes a blow-out figure above 300,000 in February. Expectations for April’s growth had been at around 190,000, according to Briefing.com.

Remember what we’ve said before: The economy doesn’t need huge jobs growth every month to stay healthy. The April number seems pretty solid, especially considering how many jobs got added over the last couple of years. It’s simply hard to keep up job gains at extremely high levels over so much time. From a stock market perspective, this could be just the type of report that could give the bulls a little traction. It shows growth, but not too much. Also, the wages component isn’t getting too hot.

Wage Growth Seems in Check

Beyond the headline number, the report might bring some relief for people worried about inflation. Hourly wages rose just 0.1% in April, compared with the pre-report Wall Street average estimate of 0.3%. Wages are up 2.6% over the last year, a decent gain for workers but probably not high enough to raise many hackles over at the Fed. The year-over-year rise is also slightly below the March year-over-year wage figure.

In addition, manufacturing saw nice jobs growth of 24,000 in April while professional and business services employment rose by 54,000. Health care was another good gainer, but most other categories didn’t see big changes.

Labor force participation of 62.8% remained the same as in March, and that’s a number that many economists would like to see move higher. Maybe the wage gains could push that one back up in coming months.

And for those who like historical comparisons, the 3.9% unemployment rate in April was the lowest since 2000, when today’s high school graduating class members were infants.

Reversal Thursday

Heading into the jobs numbers, the market engineered a pretty impressive reversal late Thursday after being down sharply early in the session. Stocks closed mostly lower, but well off the session lows that saw a nearly 400-point drop for the Dow Jones Industrial Average ($DJI). The comeback was especially evident in the financial sector, where stocks like Citigroup (C) and Goldman Sachs (GS) had been getting tattooed before clawing their way back to nearly even by the closing bell.

Looking at Thursday’s action, it appeared many investors didn’t want to get too extended in their positions one way or the other ahead of the jobs data. Also, buyers appeared to swoop in after the S&P 500 (SPX) fell below its 200-day moving average of around 2613 during the first hours of the day. As we’ve seen several times this year, moves below the 200-day seem to spark some buying and that appeared to be the case again Thursday. The 200-day moving average now stands at 2615 for anyone wondering.

Volatility remained in check Thursday, with VIX staying under 17 for the most part. Those wild swings in volatility seen earlier this year haven’t surfaced lately, though it’s never good to get too complacent. For long-term investors, however, a smoother market might be a welcome sight after all the turbulence.

Talking 10-Year

Meanwhile, the benchmark 10-year yield continues to hover between 2.9% and 3%, just as it spent nearly a month earlier this year going back and forth between 2.8% and 2.9%. It edged down to around 2.91% by Friday morning after the jobs report showed little sign of inflation edging up. One school of thought is that with economic uncertainty, especially overseas, there’s not much appetite in the market right now for a meaningful test of levels above 3%. One thing that could push yields higher might be growing wage pressure in the U.S., but so far that hasn’t been a major force.

Concern is also growing about the wide spread between U.S. 10-year yields and German 10-year yields, as we mentioned earlier this week. That spread traditionally doesn’t get too far out of whack, and that could help explain why some people are content to sit in this no-man’s land just below 3%. In fact, the way things are going, it might not be surprising even with the Fed’s expected June rate hike if by September, people might still be having this same conversation about whether yields can stay above 3%.

Looking ahead to next week, the earnings calendar quiets down a bit, while big data points include the producer price index (PPI) and consumer price index (CPI) for April. Nvidia (NVDA) is the major earnings report investors might be watching for, while retail reporting kicks off in a big way the week of May 14. Investors might also be keeping an eye out later today for the weekly U.S. oil rig count, which has been on the rise recently.

FIGURE 1: RETREATING FROM 3%.

After briefly peeking above the 3% mark last week, the 10-year Treasury yield has stepped back and spent most of its time between 2.9% and 3%. There’s a chance it could continue trading sideways as economic uncertainty overseas might keep yields in check. Data source: CME Group. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

Where are the Catalysts? Going into earnings, a lot of people thought financial and info tech results might be able to jump-start the market. As we now know, that hasn’t happened. Now earnings are about two-thirds of the way through with 77% of companies beating their EPS estimates and 73% beating their revenue estimates, well ahead of the 67% and 55% historic averages, respectively. Still, stocks remain basically stalled. Today’s jobs report, followed by retail earnings as the reporting season rolls on, now seem like they could be catalysts, but it’s not something you can necessarily count on. The one thing that might favor stocks as retail comes into view is the fact that expectations are a bit lower for many of these companies. The thinking is if they can surprise to the upside, maybe that would give the market a little more spark. Remember, a catalyst usually starts with something no one was looking for, and possible strength in retail earnings might fall into that category.

Trade in Focus: Another anticipation as we approached earnings season was that company executives might have something to say about possible tariffs amid the U.S. and China trading verbal threats. In fact, executives are addressing that topic on their conference calls, with 45 companies discussing the topic through early this week. In previous earnings periods, only five or six companies tended to bring up international trade. However, just because the conversations are occurring doesn’t necessarily mean they’re on executives’ minds. It could simply mean they’re responding to analysts who bring up the topic during the calls. CEOs have generally said they don’t know how tariffs might affect their businesses because they just don’t know what the tariffs will be. A lot of industrial companies have brought up the subject, as might be expected since many of them use steel and aluminum, but the topic also has come up on consumer discretionary calls.

Geopolitics Still Weighs: As seen Thursday, geopolitical issues like China tariffs still have the ability to weigh down the market, and that could continue. Along with China, there’s concern about the situation in North Korea, the potential unraveling of the Iran nuclear deal, and continuing Washington, D.C. political drama. We’re also getting closer to pivotal U.S. midterm elections in November. Amid all this, fears of inflation and rising interest rates combine to cast a bit of a shadow over things. “Until more clarity is provided on these concerns, investors are unlikely to reward fundamentals and the market could be stuck in the current trading range,” wrote analyst Lindsey Bell of CFRA in note to investors Thursday.

Speaking of China, the U.S. delegation left early Friday and didn’t have any statements after the meetings with their Chinese counterparts, according to The Wall Street Journal. China’s government news agency called the talks “frank, efficient and constructive.” It said both parties reached agreements in “some areas” but there remained “significant disagreements over certain issues.” Conversations will continue, the Chinese government added.

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